Rethinking Auto Bill Payments

The virtues of automated bill payments have been extolled in many articles as it provides superior convenience for credit card users.  Consumers will never have to worry about long lines at the utility service office because they can now instruct almost all utility service to deduct from the consumer bank account all payables.  

Why Rethink Automation?

A sad incident happened with Terry Perkins of New Jersey who regularly uses automated services for paying utilities.  She nearly lost her phone service though, when her credit card expired.

This is not an isolated case as many horror stories about automated bills payments are increasingly coming out.  There are essentially five reasons why consumers need to rethink their past impression that about automated financial transactions.  

In the 1990’s, consumers were writing checks to pay bills each month.  After the bundles of checks have been signed, the web-based bills payment emerged.  It got more convenient as simple buttons just need to be pressed to direct the payments.  However, funding the web based account still requires consumers to go to a bank and deposit the check.

The automation started to become more sophisticated just recently.  Consumers will never push buttons or sign checks as everything will be taken care of by the automated bills payment facility.

Automated bills payment methods have many flaws that have been noticed by consumers over years of using the system.

Errors Can Occur

First, there are cases where errors can be committed by the system as companies can draw automatically for the account.  The biller could exceed the amount drawn from the account and consumers will have to start a very inconvenient paper processing just to recover the amount.

The Electronic Payments Association says that 38 errors could be committed out of every 100,000 transactions carried out through automatic bills payment.  This is the official count which means only those that have been reported by banks.  It does not count unreported cases or those that have been resolved by the consumers themselves.

Continued Billing

The second drawback of automatic payments is that sometimes the service won’t stop.  Some consumers experienced that even though they have stop subscription from a service, the bills withdrawal still continues.  

The bank can stop the withdrawal and the money recovered from the utility company.  But the processing can take a long time and the bank will not extend credit for the unauthorized withdrawal of the service company.  

Expired Cards

Another dilemma of automatic payments is when the credit card of consumers expires.  Utility companies would simply cut off the service without due courtesy thus losing basic services.  The sad part is not all card holders may notice that their card is due to expire as communication from the issuing bank is not always up to date.